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Last week provided a significant number of data points regarding the state of the U.S. economy. On the positive side of the ledger:

The economy recovered from the first-quarter slump, U.S. real gross domestic product (GDP) grew 4% annualized in the second quarter, and the Institute for Supply Management (ISM) Manufacturing Index reached its highest level since 2011.

The jobs market continues to improve. Nonfarm payrolls added 209,000 in July and have grown by more than 200,000 per month for the past year.

Wage growth seems to be improving. The second quarter employment cost index rose 2% over the past year and average hourly earnings have also grown 2% over the past year, according to the July jobs report.

Consumer confidence seems to be improving. In July, the Conference Board’s Consumer Confidence Index reached a new post-recession high.

The negative side of the ledger was modest, including an inconsequential rise in weekly unemployment claims and a 0.1% rise in the July unemployment rate to 6.2%. In this case, however, the rise was driven by an increase in the labor force participation rate, which is an encouraging positive sign of labor force confidence. The data seem consistent with growth, averaging closer to 3% in the next couple of quarters. With the U.S. economy seeming to be on solid footing, we believe the market’s attention will turn to Federal Reserve plans for interest rates.

Outside the United States, economic data indicated a more modest economic environment, including a slip in inflation, a slowing in year-over-year eurozone inflation to 0.4%, and increased fears of deflation taking hold in Europe. June data from Japan indicated slower activity, with a small increase in the rate of unemployment and sliding retail sales and industrial production. For July, manufacturing purchasing managers surveys for Europe and Japan also indicate some moderation in activity.